DDR Corp. (DDR) Sees 2013 FFO of $1.11, Below Views
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Price: $11.99 --0%
Financial Fact:
Impairment charges: 104.88M
Today's EPS Names:
SVBT, ZEO, OTLK, More
Financial Fact:
Impairment charges: 104.88M
Today's EPS Names:
SVBT, ZEO, OTLK, More
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DDR Corp. (NYSE: DDR) today highlighted 2012 execution of strategic objectives and released guidance for 2013. During 2012 the Company significantly improved the quality of its portfolio through the acquisition of $2.1 billion of prime shopping centers ($760 million at DDR's share) and the disposition of $347 million of non-prime operating assets ($143 million at DDR's share). Investments in 2012 were funded primarily with proceeds from asset sales and $511 million of new common equity issued throughout the year, which significantly improved the Company's balance sheet as well. DDR's considerable progress in recent years recycling capital, growing its high quality pool of unencumbered prime shopping centers, lowering leverage and extending debt duration combined with strong operating results contributed to Standard & Poor's upgrade of the Company's corporate bond rating to BBB- in September and Moody's affirming its investment grade rating on DDR bonds and raising its credit outlook to positive from stable. Additionally, DDR retired $969 million of consolidated debt with a weighted average interest rate of 4.8% during the year with $1.2 billion of new long-term financings with a weighted average interest rate of 3.8%. As a result, the Company has no unsecured debt maturities until May 2015, and 2013 consolidated debt maturities are only $41 million. At year-end, the Company had over $600 million of availability under its revolving credit facilities.
The Company's operating platform continued to perform at a very high level in 2012, reporting solid improvements in leased rate, which reflect robust demand and stronger competition for quality space from retailers. During the year, the Company leased approximately 11.3 million square feet, representing a 60 basis point improvement in the leased rate over year end 2011, and resulting in a 94.2% leased rate at December 31, 2012.
Daniel B. Hurwitz, chief executive officer, commented, "2012 was another year of successful execution of our strategic objectives. We have positioned the Company for future growth with attractive investments, and our primary tenants continue to increase market share and have a significant need for new stores. With a dramatically improved portfolio of high quality prime power centers, a unique and proven operating platform, and a competitive cost of capital, we expect to generate strong relative total returns in 2013 and beyond."
In 2012, the Company completed approximately $4.5 billion of capital transactions and consolidated financing activities including the following:
Completed $2.1 billion of acquisitions of prime shopping centers and $347 million of dispositions of non-prime operating assets. DDR's share of 2012 acquisitions was $760 million and dispositions was $143 million. In addition, the Company sold $107 million of non-income producing assets during the year, of which DDR's share was $96 million.
Issued $511 million of common equity to fund the net investment in prime shopping centers while also increasing our pool of unencumbered assets and improving leverage metrics.
Issued $200 million, 6.5% Class J preferred stock to redeem $170 million, 7.5% Class I preferred stock.
Issued $450 million, 10-year, 4.625% senior unsecured notes ($300 million, June 2012; and $150 million, 3.46% yield-to-maturity, November 2012), with net proceeds used to redeem $224 million, 5.375% notes maturing October 2012 and repay borrowings under the revolving credit facility.
Closed on $350 million unsecured term loan ($300 million, 7-year tranche, with interest fixed at 3.6% for $200 million and 3.0% for $100 million; and $50 million, 5-year tranche, with interest fixed at 2.3%), with proceeds used to retire $180 million of convertible notes, refinance a portion of our 5.0% rate mortgage debt maturing in 2013, and reduce the outstanding balances under the revolving credit facilities.
Closed $103 million 7-year, 3.40% mortgage loan secured by three prime shopping centers in Atlanta, GA, Princeton, NJ and San Antonio, TX.
Closed $265 million, 7-year, 3.95% mortgage loan secured by four prime shopping centers in San Juan, PR, Atlanta, GA, Miami, FL, and Columbus, OH. The proceeds from the loan were used to repay a majority of $350 million in 5.0% rate mortgage debt set to mature in April 2013.
Extended the weighted average maturity of consolidated debt from 4.3 years to 5.1 years.
Paid cash dividends of $0.48 per common share, an increase of 118% from 2011.
The Company also achieved the following operational accomplishments in 2012:
Leased approximately 11.3 million square feet of gross leasable area.
Increased portfolio leased rate to 94.2%, up 60 basis points from 93.6% at year-end 2011 and up 100 basis points when adjusting for the Blackstone acquisition.
Increased the percentage of net operating income (NOI) generated from the prime portfolio to approximately 89.3%.
Generated full year same store NOI growth in excess of 3%.
2013 Guidance
The Company expects to generate operating FFO per diluted share of $1.07 - $1.11 in 2013, an increase of 5% to 9% over the midpoint of the latest 2012 guidance.
(***Street estimates call for 2013 EPS of $1.11.)
Significant activity assumed in this guidance is as follows:
Generate same store NOI growth of 2.0% - 3.0%, weighted to the second half of the year.
Increase year-end portfolio leased rate by 80 basis points, resulting in a leased rate of 95%.
Acquire $250 million of prime shopping centers.
Dispose of $150 million of non-prime operating assets.
Dispose of $50 million of non-income producing assets.
Bring at least $75 million of opportunistic development and redevelopment investment on line, primarily in the second half of the year.
Approximately $80 million in aggregate general and administrative expenses.
Exchange rate of 2.0 Brazilian Real per U.S. Dollar.
Opportunistic capital raising activity to improve liquidity, further extend debt duration and improve credit metrics.
Annual dividend of $0.54 per common share, representing 12.5% growth from the annual common share dividend of $0.48 per share in 2012.
The Company's operating platform continued to perform at a very high level in 2012, reporting solid improvements in leased rate, which reflect robust demand and stronger competition for quality space from retailers. During the year, the Company leased approximately 11.3 million square feet, representing a 60 basis point improvement in the leased rate over year end 2011, and resulting in a 94.2% leased rate at December 31, 2012.
Daniel B. Hurwitz, chief executive officer, commented, "2012 was another year of successful execution of our strategic objectives. We have positioned the Company for future growth with attractive investments, and our primary tenants continue to increase market share and have a significant need for new stores. With a dramatically improved portfolio of high quality prime power centers, a unique and proven operating platform, and a competitive cost of capital, we expect to generate strong relative total returns in 2013 and beyond."
In 2012, the Company completed approximately $4.5 billion of capital transactions and consolidated financing activities including the following:
Completed $2.1 billion of acquisitions of prime shopping centers and $347 million of dispositions of non-prime operating assets. DDR's share of 2012 acquisitions was $760 million and dispositions was $143 million. In addition, the Company sold $107 million of non-income producing assets during the year, of which DDR's share was $96 million.
Issued $511 million of common equity to fund the net investment in prime shopping centers while also increasing our pool of unencumbered assets and improving leverage metrics.
Issued $200 million, 6.5% Class J preferred stock to redeem $170 million, 7.5% Class I preferred stock.
Issued $450 million, 10-year, 4.625% senior unsecured notes ($300 million, June 2012; and $150 million, 3.46% yield-to-maturity, November 2012), with net proceeds used to redeem $224 million, 5.375% notes maturing October 2012 and repay borrowings under the revolving credit facility.
Closed on $350 million unsecured term loan ($300 million, 7-year tranche, with interest fixed at 3.6% for $200 million and 3.0% for $100 million; and $50 million, 5-year tranche, with interest fixed at 2.3%), with proceeds used to retire $180 million of convertible notes, refinance a portion of our 5.0% rate mortgage debt maturing in 2013, and reduce the outstanding balances under the revolving credit facilities.
Closed $103 million 7-year, 3.40% mortgage loan secured by three prime shopping centers in Atlanta, GA, Princeton, NJ and San Antonio, TX.
Closed $265 million, 7-year, 3.95% mortgage loan secured by four prime shopping centers in San Juan, PR, Atlanta, GA, Miami, FL, and Columbus, OH. The proceeds from the loan were used to repay a majority of $350 million in 5.0% rate mortgage debt set to mature in April 2013.
Extended the weighted average maturity of consolidated debt from 4.3 years to 5.1 years.
Paid cash dividends of $0.48 per common share, an increase of 118% from 2011.
The Company also achieved the following operational accomplishments in 2012:
Leased approximately 11.3 million square feet of gross leasable area.
Increased portfolio leased rate to 94.2%, up 60 basis points from 93.6% at year-end 2011 and up 100 basis points when adjusting for the Blackstone acquisition.
Increased the percentage of net operating income (NOI) generated from the prime portfolio to approximately 89.3%.
Generated full year same store NOI growth in excess of 3%.
2013 Guidance
The Company expects to generate operating FFO per diluted share of $1.07 - $1.11 in 2013, an increase of 5% to 9% over the midpoint of the latest 2012 guidance.
(***Street estimates call for 2013 EPS of $1.11.)
Significant activity assumed in this guidance is as follows:
Generate same store NOI growth of 2.0% - 3.0%, weighted to the second half of the year.
Increase year-end portfolio leased rate by 80 basis points, resulting in a leased rate of 95%.
Acquire $250 million of prime shopping centers.
Dispose of $150 million of non-prime operating assets.
Dispose of $50 million of non-income producing assets.
Bring at least $75 million of opportunistic development and redevelopment investment on line, primarily in the second half of the year.
Approximately $80 million in aggregate general and administrative expenses.
Exchange rate of 2.0 Brazilian Real per U.S. Dollar.
Opportunistic capital raising activity to improve liquidity, further extend debt duration and improve credit metrics.
Annual dividend of $0.54 per common share, representing 12.5% growth from the annual common share dividend of $0.48 per share in 2012.
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